Gross FITs 'a war on solar power'

Queensland's pricing regulator has recommended the introduction of a gross feed-in-tariff (FIT) in the state - a move that could be crippling for the solar power industry.

Or so says Giles Parkinson, writing for Reneweconomy.com.au, who argued it is just an easy way for utilities companies to stop solar power from cutting too deeply into their profits.

The Queensland Competition Authority recently advised the implementation of gross tariffs in an effort to find a fairer way to price solar power - although insiders claim that is just a ploy.

There are two types of tariff structure available in Australia - 'gross' and 'net metering'.

So what's the difference?

Well, while gross FITs require householders to sell back all of the electricity they generate to the grid at a standard rate, net metering merely requires them to return any excess.

Gross FITs were popular in the days of inflated FIT schemes, where people could get a premium price for their energy production on a kilowatt hour basis.

Unfortunately, as these prices are now below the cost of retail electricity it means homeowners have to buy back all the energy they sell to the grid at a higher price.

Alternatively, as Giles explains: "Net metering ... allows households to use solar PV as a hedge against those rising electricity prices, using the electricity they produce to reduce their requirements from the grid.

"However, while this offers significant savings to householders, this cuts the retailers and the network operators out of the game."

The suggestion for gross FITs is one of a number of measures that have been put forward by utilities firms and network operators in recent months.

Others include enforcing network restrictions, introducing standing charges and making changes to Australia's sustainable power targets.

However, Giles stated: "The solar industry says the introduction of gross tariffs ... would be devastating for the industry and represented a greater threat than even the dilution of the renewable energy target.”

Parkinson, who is a former editor of Climate Spectator, said the potential for more gross FITs is just one factor that is currently holding back the solar power sector.

He also pointed to the problems brewing with grant suspensions, which have resulted in a pause on funding for the Clean Technology Investment Program.

While the government has fobbed off speculation that it could spell the end for the much-supported scheme, Solar Business Services' founder Nigel Morris recently described halting the initiative as a "knee jerk, spontaneous reaction".